Wall Street Journal: Eastern Union Rewrites the Rules

Peters Grant wrote an article in the Wall Street Journal about the frum-owned Eastern Union Funding, a midsize commercial-mortgage broker, which caused a ripple last year when it capped its fee on any deal at $135,000, partly because Eastern executives saw that the real-estate-lending business was becoming increasingly streamlined.

Grand says that now, Eastern Union, which was founded in Brooklyn, is taking its willingness to bend on fees to another level. The firm continues to provide traditional mortgage-broker services, in which the borrower pays a commission once a loan closes.

But the firm, which has about 110 employees and handled more than $3 billion of loans last year, also offers some owners of properties that have strong cash flows an a la carte range of services on more of a consulting basis. For example, Eastern Union might charge a borrower as little as $15,000 for the firm’s help in getting a so-called “term sheet” from a lender that lays out the terms of a loan but is well short of a done deal.

“We’re telling clients, if the traditional mortgage broker doesn’t work for you, can we have a relationship where I provide you portions of what you need,” said Abraham Bergman, Eastern Union’s managing partner and co-founder. “I can provide you value, we can negotiate a price and you’ll pay me for that.”

As a result, Grant reports, some borrowers are pressuring brokers to cut their commissions, calling them excessive. “At one point it’s going to give,” said Ira Zlotowitz, the firm’s president and co-founder. “I waited it out. I enjoyed the ride.”But Eastern Union executives say that their flexibility on fees reflects major changes taking place in the commercial-real-estate finance industry, partly because of new technology. Increasingly, the process is becoming standardized and it’s becoming easier to do larger deals. You can read Grant’s full report here.